Hours and the Market
John S. Yelvington
2005 - Patricia B. Abels, in “The 150-Hour Requirement
and Its Effect on Student Enrollment” (April 2004),
summarizes why the 150-hour requirement was initially implemented.
She contends that current salaries yield insufficient payback,
because of the explicit cost of additional education and the
opportunity cost of a year of foregone salary, both assertions
agreed to wholeheartedly by the author. Insufficient payback
has reduced the number of students entering the profession
and has endangered the long-term future of the profession.
that the payback is insufficient, the only way to “stop
the bleeding” is for new “five-year CPAs”
to receive higher salaries than “non-five-year CPAs”
(four-year CPAs or other four-year degrees).
to Abels’ article, accounting professor Susan B. Anders
(“Does the 150-Hour Requirement Affect Student Enrollment?
Money Talks,” August 2004) suggests that firms should
pay more for five-year CPAs. The only way five-year CPAs
can receive more pay is if the market is willing to pay
the “wage premium.” The market will pay the
premium only if five-year CPAs show additional value in
the form of increased productivity, better adaptability,
or better interpersonal skills.
Anders and Abels state that this premium is not currently
being realized by five-year CPAs; thus, the market is sending
a clear signal: Five-year CPAs have not proved themselves
more productive than non-five-year CPAs.
market cannot be forced to purchase an overpriced commodity.
The profession appears to have three possible solutions:
Continue as is with no changes;
Revoke the requirement; or
Move to raise salaries by raising the market value of
only practical solution is the last. The CPA profession
must understand what skills the market is willing to pay
for. Instead of additional accounting skills, the market
may value additional nonaccounting or nontechnical skills.
Once deficiencies are identified, it is incumbent on the
profession to require new CPAs to gain such skills. Myriad
issues must be addressed to ensure that a stream of qualified
young professionals will carry the profession in years to
S. Yelvington, PhD, CPA, is an assistant professor
of economics at Reinhardt College, Waleska, Ga. He gratefully
acknowledges the contribution of Howard L. Reese, PhD, CPA,
an associate professor of accounting at Reinhardt.